Assuming That the Inter-Affiliate Cash Flows Are Uncorrelated with One

Assuming that the inter-affiliate cash flows are uncorrelated with one another,calculate the minimum cash balance to have if the firm follows a conservative policy of having three standard deviations of cash for precautionary purposes. $$\begin{array} { l c c } & \text { Expected } & \text { Stardard } \\ \text { Affiliate } & \text { Trarnactions } & \text { Deviation } \\\text { U.S. }& \$ 100,000& \$ 40,000 \\\text { Carada } & \$ 150,000& \$ 60,000 \\\text { Mexico } & \$ 175,000 & \$ 30,000 \\\text { Chile }& \$ 200,000 & \$ 70,000\end{array}$$

A) $34,960.33
B) $314,642.65
C) $104,880.88
D) none of the options

Correct Answer:

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